Inquiring minds are following recent real estate market reports and surveys — and trying to figure out what the h%ll is going on!?

Yesterday May 18 saw a huge boost in the Dow Jones and S&P 500 after the National Association of Home Builders / Wells Fargo Housing Market Index (HMI) showed that home builder confidence levels were up for a second consecutive month — the highest level in 8 months.

Builders are responding to what they perceive to be some of the best home buying conditions of a lifetime.

The fact that the May HMI continued to tick up from April’s five-point increase provides confirming evidence that the improved confidence level was no fluke.

Yes, these may be some of the best home buying conditions of a lifetime, but it is important to note that people are not necessarily buying NEW homes. There is a surplus of homes on the market, including foreclosures and what some refer to as “shadow real estate” which is not even on the books yet.

It only makes sense that if builder sentiment is the highest it has been in the last 8 months, that we should be seeing more housing starts and construction. It’s curious, then, to learn today that we are seeing a contraction in housing starts, in fact, a record LOW with builders breaking ground on the fewest homes in April, with a drop of 12.8% month-over-month.

Green shoots are everywhere, it seems.